1970 (4) TMI 142 - HC - VAT and Sales Tax

Summary

Issues:
1. Assessment of sales tax on materials collected for road construction by a contractor.
2. Timeliness of the reference judgment delivery by the Tribunal under the Orissa Sales Tax Act.
3. Interpretation of the term "sale" under the Orissa Sales Tax Act in the context of construction agreements.

Analysis:
1. The petitioner, a contractor undertaking road construction, collected materials for the work and received advances from the Public Works Department (PWD). Sales tax authorities assessed the petitioner separately for the materials. The Tribunal referred the question of whether the PWD agreement involved two contracts - one for labor and one for sale of goods - to the High Court for opinion.

2. The Tribunal's delay in delivering the reference judgment raised a preliminary objection on the basis of limitation. The Orissa Sales Tax Act specifies a 90-day limit for the Tribunal to refer a case to the High Court after receiving an application. The Court clarified that the word "may" in the Act is directory, not mandatory, and delays by the Tribunal do not render the judgment void.

3. The Court emphasized the definition of "sale" under the Orissa Sales Tax Act, aligning it with the Sale of Goods Act. It distinguished between agreements for immovable and movable property sales. In the case of construction agreements like the PWD F-2 form, where movable goods are supplied as part of the construction, the Court ruled that unless there is a specific agreement for the sale of movables, they are not subject to sales tax. The Court concluded that in the absence of a separate agreement for the sale of goods, the materials supplied for road construction were not liable to sales tax.

In conclusion, the High Court accepted the references, ruling in favor of the petitioner, and ordered a refund of reference fees. The judgment clarified the interpretation of sales tax liability in construction agreements and the timeliness of reference judgments under the Orissa Sales Tax Act.